Since Forever 21’s bankruptcy filing in September, the discount retailer has made itself more appealing to buyers by slashing $91 million in annual rent payments and $100 million in operational costs.
But now it is asking for more time to orchestrate a sale before competing plans get in the way.
The Los Angeles-based chain continues to employ 22,000 workers and operate 440 stores across the U.S. as well as an e-commerce platform and its beauty brand, Riley Rose, according to a motion filed Friday.
Forever 21’s filing asks a judge to extend the period during which it has the exclusive right to file and solicit acceptance of a reorganization plan — it filed one in December — before competing interests submit their own plans for the company.
Forever 21 says it has made steps to stabilize the company since it filed for Chapter 11 bankruptcy in September, including cutting its rental and operational expenses. Forever 21 has shuttered 102 stores and is in the midst of selling two warehouses — 2800-2900 Sierra Pine Avenue in Vernon, Calif., and 3800 North Mission Road in Los Angeles — for a combined $37 million, according to the filing.
The Mission Road warehouse spans 90,000 square feet and will be sold to Palatine Capital Partners Acquisitions, court records show. The Sierra Pine building measures 133,000 square feet and is occupied by VIG Furniture, which Forever 21 says is the intended buyer. The proceeds from those transactions will be used to pay down part of its outstanding $75 million debtor-in-possession term loan, the retailer says.
Bloomberg reported last week that mall owner Simon Property Group and Authentic Brands Group were in talks to buy the beleaguered retailer.
Forever 21 in its Jan. 24 filing acknowledged it is working to sell the company: “Any interruption of those efforts would greatly hinder the debtors’ ability to consummate a value-maximizing transaction,” according to the filing.
Forever 21 and its attorney in the bankruptcy case, Joshua Sussberg of Kirkland Ellis, did not immediately respond to requests for comment.
The young adult discount fashion retailer, whose stores tend to be smaller than traditional department stores but larger than regular in-line mall locations, filed for bankruptcy in part because it expanded too quickly and suffered a drop in foot traffic.
The retail sector has faced a host of challenges that have led to scores of bankruptcies and store closures — too much brick-and-mortar space, unsustainable private equity debt and the growth of e-commerce.
Luxury department store Barneys New York was sold last fall to Authentic Brands Group, which intends to close all Barneys locations. Among Barneys’ chief reasons for filing for bankruptcy was skyrocketing rent.
Fairway Market also recently filed for bankruptcy — for a second time. The supermarket chain is in talks to be acquired by a rival in a deal that would keep only five of its 14 stores open.
Write to Mary Diduch at [email protected]